N-able: Fiscal 4Q21 Financial Results

N-able, Inc. reported results for its fourth quarter and full year ended December 31, 2021.

“With our 2021 foundational efforts behind us, we have turned our focus squarely to elevating and accelerating our business,” said president and CEO John Pagliuca. “We are seeing progress in each of our key investment areas, which include building a multi-pronged go-to-market approach, bolstering our partner success resources, and bringing powerful and secure products to market faster. Our industry tailwinds, such as increased IT complexity, labor scarcity, and rising cyber threats, remain as strong as ever, and we have exciting projects in the pipeline that position us well to solve our MSP partners’ pain points. As the N-able team moves forward together, we are focused on execution and on carrying the momentum we have generated into a successful 2022.”

“We had a strong finish to the year, with our highest level of new bookings in 2021 occurring in the fourth quarter,” added EVP and CFO Tim O’Brien. “Our quarterly performance continued to be driven by our security and data protection solutions, and in particular our N-able EDR and N-able Microsoft 365 cloud-to-cloud backup solutions. In addition, our trailing twelve months dollar-based net retention rate remained consistent at 110%, reflecting healthy expansion among our existing MSP partners. The go-to-market and product investments that we started making in 2021 are beginning to generate dividends and will contribute to revenue acceleration throughout the year as well as margin improvement in the back half of 2022.“

4FQ21 financial highlights:
• Total revenue of $89.5 million, representing approximately 12% Y/Y growth, or approximately 13% Y/Y growth on a constant currency basis.
• Subscription revenue of $87.3 million, representing approximately 13% Y/Y growth, or approximately 14% Y/Y growth on a constant currency basis.
• GAAP gross margin of 85.1% and non-GAAP gross margin of 86.6%.
• GAAP net income of $2.1 million, or $0.01 per diluted share, and non-GAAP net income of $13.4 million, or $0.07 per diluted share.
• Adjusted EBITDA of $27.8 million, representing an adjusted EBITDA margin of 31.0%.

FY21 financial highlights:
• Total revenue of $346.5 million, representing approximately 14% Y/Y growth, or approximately 12% Y/Y growth on a constant currency basis.
• Subscription revenue of $336.8 million, representing approximately 15% Y/Y growth, or approximately 12% Y/Y growth on a constant currency basis.
• GAAP gross margin of 84.9% and non-GAAP gross margin of 86.8%.
• GAAP net income of $0.1 million, or $0.00 per diluted share, and non-GAAP net income of $59.0 million, or $0.35 per diluted share.
• Adjusted EBITDA of $113.3 million, representing an adjusted EBITDA margin of 32.7%.

Additional highlights for 4FQ21:
• Announced strong growth of its Technology Alliance Program (TAP), adding more than 25 partners in 2021, including more than half of which are focused on security. Since early 2021, relationships added include many well-known technology leaders, such as Cisco, Sophos, and Webroot, as well as several emerging tech innovators – including Liongard and Zomentum – bringing the total number of partners in the program to 65. The TAP program is aimed at helping partners manage, monitor, and protect their customers using the technology they need most to get the job done right, through seamless integrations into the platforms they rely on from N-able.
• The company was named Service Provider of the Year at the European IT & Software Excellence Awards 2021, sponsored by IT Europa. It was also a finalist in the Security Vendor of the Year category.
• The appointment of 2 new leaders to data protection business: Chris Groot was promoted to GM, data protection, and Stefan Voss joined the company as VP of product management, data protection. He was formerly VP of sales for N-able, and leads all key functions critical to delivering long-term, sustainable growth, including strategy and product development, for data protection business. He joins most recently from Dell where he was chief product owner of a portfolio of data protection products. He will help drive the data protection business in a growing market segment.
• The addition of Ann Johnson, corporate VP of security, compliance, identity, and management business development for Microsoft, as a member of the board of directors. In addition, the board established a cybersecurity committee to oversee policies, plans, and programs relating to cybersecurity and data protection risks associated with its products, services, and business operations.

Balance Sheet
At December 31, 2021, total cash and cash equivalents were $66.7 million and total debt was $338.9 million.

Financial Outlook for 1FQ22
• Total revenue in the range of $90.1 to $90.6 million, representing approximately 9% Y/Y growth, or approximately 11% growth on a constant currency basis.
• Adjusted EBITDA in the range of $26.5 to $27.0 million, representing approximately 30% of total revenue.

Financial Outlook for FY22
• Total revenue in the range of $384 to $388 million, representing 11% to 12% Y/Y growth, or 13% to 14% Y/Y growth on a constant currency basis.
• Adjusted EBITDA in the range of $118 to $122 million, representing approximately 31% of total revenue.